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3rd quarter 2015 results
Solid profitable growth
Jacques van den Broek, CEO
Robert Jan van de Kraats, CFO
Randstad Holding nv
October 29, 2015
disclaimer & definitions
Certain statements in this document concern prognoses about the future financial condition,
risks, investment plans and the results of operations of Randstad Holding and its operating
companies, as well as certain plans and objectives. Obviously, such prognoses involve risks
and a degree of uncertainty, since they concern future events and depend on circumstances
that will apply then. Many factors may contribute to the actual results and developments
differing from the prognoses made in this document. These factors include, but are not
limited to, general economic conditions, a shortage on the job market, changes in the
demand for personnel (including flexible personnel), achievement of cost savings, changes in
the business mix, changes in legislation (particularly in relation to employment, staffing and
tax laws), the role of industry regulators, future currency and interest fluctuations, our ability
to identify relevant risks and mitigate their impact, the availability of credit on financially
acceptable terms, the successful completion of company acquisitions and their subsequent
integration, successful disposals of companies, and the rate of technological developments.
These prognoses therefore apply only on the date on which this document was compiled. The
quarterly results as presented in this press release are unaudited.
-------------------------------------------------------------------------------------------------------------EBITA: operating profit before amortization and impairment acquisition-related intangible
assets and goodwill, badwill, integration costs and one-offs.
organic growth is measured excluding the impact of currency effects, acquisitions,
disposals and reclassifications.
diluted EPS is measured before amortization and impairment acquisition-related intangible
assets and goodwill, badwill, integration costs and one-offs.
2
October 29, 2015
3rd quarter results 2015
agenda
performance
financial results & outlook
Q&A
appendices
3
October 29, 2015
3rd quarter results 2015
performance
4
October 29, 2015
3rd quarter results 2015
Q3: Solid profitable growth
5
Revenue of € 4,977 million;
organic growth +5.4%;
gross profit up 5.8%
Topline growth broadly
stable across most
countries
Gross margin up 30 bp to
18.8%;
Perm fees up 13%, now
10.5% of gross profit (vs.
9.8% last year)
Underlying EBITA of € 249
million (+13% organically);
EBITA margin up 30 bp to
5.0%; Organic L4Q ICR of
59%
Adjusted net income up
24% from € 139 million to
€ 172 million.
ROIC at 8 year high of
16.2%.
DSO improved to 50.8
(from 52.0 in Q3 2014);
leverage ratio of 0.5
compared to 0.9 last year
Global MSP spend under
management up 27%, RPO
revenue up 24%
Volumes in October so far
indicate a continuation of
the trend
Randstad acquires
RiseSmart, an
outplacement innovator
October 29, 2015
3rd quarter results 2015
2015: profitability on track
€ million
Q3 ’15
Q3 ’14
% Org.
L4Q ’15
L4Q ’14
% Org.
revenue
4,977
4,516
+5%
18,720
17,032
+5%
934
835
+6%
3,492
3,125
+6%
18.8%
18.5%
18.7%
18.3%
685
625
2,676
2,460
opex %
13.8%
13.8%
14.3%
14.4%
EBITA*
249
210
816
664
5.0%
4.7%
4.4%
3.9%
gross profit
gross margin
operating expenses*
EBITA margin*
+4%
+13%
organic growth/wd over L4Q at +5.3%
L4Q gross profit growth at +6.3%
-
gross margin up by 40 bp YoY for L4Q
-
annualized perm growth at +15%
annualized operating expenses* up 3% organically YoY
EBITA* margin over the L4Q up to 4.4%, from 3.9%
-
L4Q organic incremental conversion ratio of 59%
* Before integration costs & one-offs.
6
October 29, 2015
3rd quarter results 2015
+3%
+18%
topline stable in most countries
YoY Randstad growth development
15%
5%
-5%
-15%
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015
Group
Europe
North America
Rest of World
stable growth in the majority of European countries; Netherlands & France (in line
with market), Italy accelerating
growth continues in North America; above market US staffing performance and
ahead of challenging Canada market
solid growth in most emerging markets
7
October 29, 2015
3rd quarter results 2015
North America: stable growth in US Staffing
revenue +4% (Q2: +5%)
- 3% tougher comparison base
- perm up 9% (Q2: +16%)
- GP up 9% (Q2: +10%)
US Staffing & Inhouse, revenue growth
+6% (Q2: +7%)
performance North America - quarterly
1.200
7%
1.100
6%
1.000
5%
900
4%
800
3%
700
2%
Q3 2014
- MSP spend under management up 18%
Canada: revenue down 4% (Q2: -/-2%)
- ahead of a challenging market
EBITA margin up to 6.3% from 5.7% LY
- restructuring & M&A charges of € 6.4M
8
October 29, 2015
3rd quarter results 2015
Q1 2015
Q2 2015
revenue in € M
US Professionals, gross profit up 3%
Randstad Sourceright: Net fee growth
+17% (Q2: +25%)
Q4 2014
Q3 2015
EBITA margin
performance North America - annually
5.000
4.500
4.000
3.500
3.000
2.500
2.000
1.500
1.000
6%
5%
4%
3%
2%
2011
2012
2013
revenue in € M
2014
2015 L4Q
EBITA margin
France: in line with market
performance France - quarterly
revenue up 3% YoY (Q2: +4%)
800
6%
- combined Staffing & Inhouse at +3% YoY
- Professionals at +2% vs. Q2: +2%
- perm grew 23% (Q2: +6%)
5%
700
4%
3%
600
2%
gross profit +2% YoY (Q2: +3%)
500
1%
Q3 2014
Q4 2014
Q1 2015
revenue in € M
EBITA margin at 5.8% vs. 6.0% LY
Q2 2015
Q3 2015
EBITA margin
- balancing client profitability with market
performance
performance France – annually
4.000
6%
3.500
5%
3.000
4%
2.500
3%
2.000
2%
1.500
1%
2011
2012
2013
revenue in € M
9
October 29, 2015
3rd quarter results 2015
2014
2015 L4Q
EBITA margin
the Netherlands: solid growth on tougher comparables
performance the Netherlands - quarterly
revenue at +10% (Q2: +15%)
- perm growth accelerated to +28% (Q2:
+21%)
- 4% tougher comparison base
800
8%
7%
700
6%
600
5%
4%
500
combined Staffing & Inhouse
businesses
3%
400
2%
Q3 2014
Q4 2014
Q1 2015
revenue in € M
Q2 2015
Q3 2015
EBITA margin
- +9% YoY (Q2: +15%)
- broadly in line with the market
performance the Netherlands - annually
3.250
Professionals
7,0%
3.000
- up 20% (Q2: +12%)
6,5%
2.750
6,0%
2.500
EBITA margin at 6.1% vs. 6.3% LY
5,5%
2.250
2.000
5,0%
2011
2012
2013
revenue in € M
10
October 29, 2015
3rd quarter results 2015
2014
2015 L4Q
EBITA margin
Germany: returning to growth
performance Germany - quarterly
revenue growth +2% YoY (Q2: 0%)
- perm growth of +15% (Q2: +26%)
gross profit up 2% (Q2: -/-1%)
- SME outgrowing large clients
600
7%
6%
500
5%
400
4%
300
3%
200
2%
Q3 2014
EBITA margin at 5.7% vs. 5.4% LY
Q4 2014
Q1 2015
revenue in € M
Q2 2015
Q3 2015
EBITA margin
- strong operating leverage
performance Germany - annually
2.500
7%
6%
2.000
5%
1.500
4%
1.000
3%
500
2%
2011
2012
2013
revenue in € M
11
October 29, 2015
3rd quarter results 2015
2014
2015 L4Q
EBITA margin
Belgium: focus on profitability
performance Belgium - quarterly
revenue +1% (Q2: +6%)
400
7%
- Staffing and Inhouse growth at +1% (Q2: +7%)
6%
300
gross profit up 6% YoY (Q2: +5%)
EBITA margin up to 6.1% vs. 4.9% LY
5%
4%
200
3%
100
2%
Q3 2014
Q4 2014
Q1 2015
revenue in € M
- solid operating leverage maintained
Q2 2015
Q3 2015
EBITA margin
performance Belgium - annually
1.700
6%
1.400
5%
1.100
4%
800
3%
500
2%
2011
2012
2013
revenue in € M
12
October 29, 2015
3rd quarter results 2015
2014
2015 L4Q
EBITA margin
Iberia: stable growth
performance Iberia - quarterly
Iberia revenue stable; up 8% (Q2:
+8%)
350
5%
300
4%
250
Spain
3%
200
- revenue growth +12% (Q2: +14%)
- Professionals grew 68% despite tough
2%
150
100
1%
Q3 2014
comparables
Q4 2014
Q1 2015
revenue in € M
Q2 2015
Q3 2015
EBITA margin
- perm growth +32%
- investing in growth
performance Iberia - annually
Portugal
1.200
- revenue down 2% (Q2: -/- 3%), with focus on
client profitability
5%
1.000
4%
800
- continued growth in call center business
EBITA margin at 4.7% vs. 4.8% LY
3%
600
2%
400
200
1%
2011
2012
2013
revenue in € M
13
October 29, 2015
3rd quarter results 2015
2014
2015 L4Q
EBITA margin
UK: improved profitability
performance UK - quarterly
revenue up 1% YoY (Q2: 0%)
- gross profit up 2% (Q2: +5%)
- good performance in Construction &
Education
- perm fees up 4% (Q2: +5%)
250
2,5%
2,0%
200
1,5%
150
1,0%
100
0,5%
50
EBITA margin up to 2.0% vs. 1.4% LY
0,0%
Q3 2014
Q4 2014
Q1 2015
revenue in € M
Q2 2015
Q3 2015
EBITA margin
performance UK - annually
1.000
2,0%
800
1,5%
600
1,0%
400
0,5%
200
0,0%
2011
2012
2013
revenue in € M
14
October 29, 2015
3rd quarter results 2015
2014
2015 L4Q
EBITA margin
Other European countries: solid growth continues
performance ROE - quarterly
overall revenue growth +11% (Q2:
+9%)
500
6%
400
5%
300
Italy
4%
200
- revenue growth at 20% continued to accelerate
(Q2: 16%)
3%
100
0
2%
Q3 2014
- focus on specialties and perm (+44%) paying off
Q4 2014
Q1 2015
revenue in € M
Q2 2015
Q3 2015
EBITA margin
Switzerland
- growth was flat (Q2: +2%)
- ahead of a difficult market
performance ROE - annually
1.800
5%
1.500
Poland
- growth accelerated to +7% (Q2: +2%)
- continued impact of candidate scarcity and
tough comparison base
4%
1.200
3%
900
2%
600
300
1%
2011
EBITA margin at 5.0% vs. 4.2% LY
- profitability improving in most countries
15
October 29, 2015
3rd quarter results 2015
2012
2013
revenue in € M
2014
2015 L4Q
EBITA margin
Rest of the world: stable growth
overall revenue growth stable at +11%
(Q2: +12%)
performance ROW - quarterly
450
2,0%
400
Japan, growth at +6% YoY (Q2: +6%)
- perm grew 63% (Q2: +25%)
1,5%
350
1,0%
300
0,5%
250
Australia / New Zealand grew 11%
(Q2: +16%)
200
0,0%
Q3 2014
Asia, growth at +10% (Q2: +9%)
- investing in growth across region
Latin America, up 15% (Q2: +16%)
EBITA margin up to 1.5%
from 1.0% LY
- focus shifting to growth and profitability
16
October 29, 2015
3rd quarter results 2015
Q1 2015
revenue in € M
- perm grew 11%
- India growing 16%, China +27%
Q4 2014
Q2 2015
Q3 2015
EBITA margin
performance ROW - annually
1.800
1,2%
1.600
1,0%
1.400
0,8%
1.200
0,6%
1.000
0,4%
800
0,2%
600
0,0%
2011
2012
2013
revenue in € M
2014
2015 L4Q
EBITA margin
financial results & outlook
17
October 29, 2015
3rd quarter results 2015
income statement Q3 2015
€ million
% Org.
L4Q ’15
L4Q ’14 % Org.
4,977
4,516
+5%
18,720
17,032
+5%
934
835
+6%
3,492
3,125
+6%
18.8%
18.5%
18.7%
18.3%
685
625
2,676
2,460
13.8%
13.8%
14.3%
14.4%
249
210
816
664
5.0%
4.7%
4.4%
8
6
53
3.9%
49
241
205
763
615
-/- 26
-/- 37
-/- 137
-/- 145
net finance costs
-/- 6
-/- 11
-/- 45
-/- 22
income before taxes
210
157
582
449
-/- 57
-/- 43
-/- 162
-/- 133
net income
153
113
421
316
adjusted*** net income**
diluted EPS***
172
0.93
139
0.77
540
2.94
440
2.44
revenue
gross profit
gross margin
operating expenses*
opex margin
EBITA*
EBITA margin*
integration costs & one-offs
reported EBITA
amortization & impairment
tax
18
Q3 ’15 Q3 ’14
+4%
+13%
*
Before integration costs and one-offs.
** Attributable to holders of ordinary shares.
*** Before amortization and impairment acquisition-related intangible assets and goodwill, badwill, integration costs and one-offs.
October 29, 2015
3rd quarter results 2015
+3%
+18%
Figures stated in table are rounded
performance by revenue category
Staffing
in € M
Q3
2015
Q3
2014
*%
organic
L4Q
2015
L4Q
2014
*%
organic
revenue
2,918
2,681
5%
10,934
10,136
4%
151
127
20%
479
404
21%
EBITA margin
5.2%
4.7%
4.4%
4.0%
Inhouse
in € M
Q3
2015
Q3
2014
*%
organic
L4Q
2015
L4Q
2014
*%
organic
revenue
1,090
959
9%
4,048
3,543
10%
58
51
4%
217
178
11%
EBITA margin
5.3%
5.3%
5.3%
5.0%
Professionals
in € M
Q3
2015
Q3
2014
*%
organic
L4Q
2015
L4Q
2014
*%
organic
revenue
969
877
4%
3,739
3,353
3%
EBITA
55
48
5%
182
142
19%
5.7%
5.5%
4.9%
4.2%
EBITA
EBITA
EBITA margin
* Organic change in revenue is per working day.
19
October 29, 2015
3rd quarter results 2015
continued focus on activitybased field steering
FTE investments in growth
markets
continued transfer of clients
from Staffing to ensure right
delivery model is offered
good growth continues across
our industrial and logistics
clients
US Professionals; F&P Mgt
change, IT segments
performing well
Strong profitable growth in
Dutch Professionals
gross margin bridge
YoY gross margin development
+ 0.2%
+ 0.1%
+ 0.0%
18.8%
18.5%
temp margin stable, mix offsetting price
perm fees grew 13% YoY organically
 10.5% of GP (up from 9.8% LY)
HRS/others improvement driven by growth of MSP/RPO (Sourceright)
20
October 29, 2015
3rd quarter results 2015
operating expenses bridge
sequential OPEX development in € M
+2
+2
-/-2
-/-6
688
21
+2
-/-1
685
OPEX up € 3M organically (sequentially)
FTE growth in North America and Europe
favorable FX impact; slight euro rebound
continued investment in emerging markets
October 29, 2015
3rd quarter results 2015
net debt at € 453M
leverage ratio at 0.5
€ million
September 30, 2015
September 30, 2014
2,637
2,617
operating working capital
708
601
net tax assets
567
514
other assets and liabilities
216
137
4,129
3,869
3,676
3,208
453
661
invested capital
4,129
3,869
DSO, Days Sales Outstanding**
working capital as % of revenue
leverage ratio
return on invested capital*
50.8
3.8%
0.5
16.2%
52.0
3.5%
0.9
14.0%
goodwill and intangible assets
invested capital
equity
net debt
* Based on underlying EBITA (last 12 months) less income taxes paid (last 12 months) as a percentage of invested capital. For September 30,
2014, ROIC calculation income taxes paid in Q4 2013 have been adjusted for the payment of a liability of € 131M to the Dutch tax authority.
** DSO, (Days Sales Outstanding), moving average
Figures stated in table are rounded
22
October 29, 2015
3rd quarter results 2015
Q3 ’15 free cashflow
€ million
Q3 ’15
Q3 ’14
L4Q ’15
L4Q ’14
EBITDA
257
220
829
680
30
-/- 32
-/- 12
-/- 16
-/- 21
208
-/- 90
103
-/- 37
-/- 4
-/- 13
-/- 20
250
-/- 1
-/- 106
-/- 147
-/- 3
-/- 65
-/- 70
-/- 7
431
-/- 92
7
-/- 255
-/- 38
-/- 63
-/- 60
-/- 7
263
-/- 4
net issue/purchase of ordinary shares
-
-
-/- 19
-/- 22
net finance
1
-/- 11
-/- 11
-/- 25
dividend paid
-
-
-/- 94
-/- 68
translation effects and other items
4
-/- 21
-/- 7
-/- 15
123
217
208
129
change in OWC
income taxes
provisions & employee benefit obl.
net additions in PPE and software
other items
financial receivables
free cash flow
net acquisitions/disposals/buyouts
decrease of net debt
L4Q ‘14 free cash flow of € 394M (when adjusted for the payment of a liability of € 131M to the Dutch tax authority)
Figures stated in table are rounded
23
October 29, 2015
3rd quarter results 2015
outlook
organic revenue growth was 5.4% in Q3 and in September 5.7%
- volumes in October so far indicate a continuation of the trend
gross margin is expected to be stable sequentially
there is no significant working day impact in Q4
for Q4 we expect a minor increase in operating expenses (on an organic basis)
24
October 29, 2015
3rd quarter results 2015
on track
growth &
25
October 29, 2015
3rd quarter results 2015
26
Revenue of € 4,977 million;
organic growth +5.4%;
gross profit up 5.8%
Topline
Topline growth
growth broadly
broadly
stable
stable across
across most
most
countries
countries
Gross
Gross margin
margin up
up 30
30 bp
bp to
to
18.8%;
18.8%; Perm fees up 13%,
now
Perm10.5%
fees up
of13%,
grossnow
profit
(vs.
10.5%
9.8%
of gross
last year)
profit (vs.
9.8% last year)
Underlying
Underlying EBITA
EBITA of
of €€ 249
249
million
million (+13%
(+13% organically);
organically);
EBITA
EBITA margin
margin up
up 30
30 bp
bp to
to
5.0%;
5.0%; Organic
Organic L4Q
L4Q ICR
ICR of
of
59%
59%
Adjusted net income up
24% from € 139 million to
€ 172 million.
ROIC at 8 year high of
16.2%.
DSO
DSO improved
improved to
to 50.8
50.8
(from
(from 52.0
52.0 in
in Q3
Q3 2014);
2014);
leverage
leverage ratio
ratio of
of 0.5
0.5
compared
compared to
to 0.9
0.9 last
last year
year
Global
Global MSP
MSP spend
spend under
under
management
management up
up 27%,
27%, RPO
RPO
revenue
revenue up
up 24%
24%
Volumes
Volumes in
in October
October so
so far
far
indicate
indicate aa continuation
continuation of
of
the
the trend
trend
Randstad acquires
Risesmart, an
outplacement innovator
October 29, 2015
3rd quarter results 2015
appendices
our priorities
Client
Staffing
Professionals
leverage our expertise
in specialty staffing
focus on permanent
placements
SME
28
October 29, 2015
implementing global
concept per segment
focus on permanent
placements
SME
3rd quarter results 2015
total talent architecture
Inhouse
expand in white-collar
and professionals
increase share of wallet
HRS
grow in MSP and RPO
support TTA approach:
payrolling
outplacement
outsourcing
setting the ambition
profitable organic growth through activity-based field steering
grow to
5-6% EBITA
- profitable growth
- improve margin
- increase productivity
activity-based field steering
- market validation
- funnel management
(temp & perm)
growth
management
- weekly activity mgt
accelerator
framework
- bottom-up
planning
- staffing/specialties
- role & responsibilities
- professionals
- accountability
- perm (staffing & profs)
- pricing guidelines
- define & apply growth model
integrated approach of line management & all functional disciplines
29
October 29, 2015
3rd quarter results 2015
strategic roadmap
driven by best people, strong concepts, excellent execution and superior brands
M&A
Tech
TTA
goals
M&A, seamless fit
integrations
• strategic fit
• value creation
• manageability
HR technology
• being the most agile integrator of
technology & services in our industry
Randstad Innovation Fund (RIF)
• capturing trends & future
business in HR technology
Org
Total Talent Architecture, World Class Customer Experience
• creating quantifiable business impact addressing the entire
workforce of our clients
ABFS
World League People, at the right place, at the right time
• optimized organization structure
• high performance culture & people engagement
• continuous process improvement
Activity-Based Field Steering
• driving commercial excellence;
brand strength, leads and conversion
today
30
October 29, 2015
3rd quarter results 2015
Shape the world of
work
• optimal workforces for
clients
• the best jobs for
candidates
Grow to 5-6% EBITA
profitable growth
improve margin
increase productivity
•
•
•
financing: fixed vs. floating interest rates
10 year historic interest rates comparison 1M vs. 5Y
6%
5%
4%
3%
average fixed rate = 2.4%
2%
average floating rate = 1.5%
1%
0%
-1%
September 2015
October 2005
we use floating interest rates as a natural hedge
- spread above Euribor of 50-115 bps
31
October 29, 2015
3rd quarter results 2015
revenue split Q3 2015
geographical areas
revenue categories
8%
North America
19%
8%
24%
France
NL
Germany
Belgium
Iberia
5%
6%
7%
15%
22%
59%
UK
RoE
11%
RoW
16%
staffing
32
October 29, 2015
3rd quarter results 2015
inhouse
professionals
EBITA breakdown by geography
Q3 2015
Q3 2014
2%
2%
2%
1%
North America
8%
28%
6%
7%
6%
France
25%
NL
Germany
8%
8%
12%
Belgium
Iberia
11%
17%
21%
October 29, 2015
RoE
RoW
18%
33
12%
UK
3rd quarter results 2015
20%
19%
outlets* by region
end of period
North America
Q3 2015
Q2 2015 Q1 2015
Q3 2014
1,102
1,084
1,065
1,084
1,074
France
729
741
739
741
743
the Netherlands
648
644
659
689
666
Germany
547
547
556
555
548
Belgium/Lux
311
303
306
310
314
United Kingdom
130
134
131
140
141
Iberia
303
302
295
292
288
Rest of Europe
374
389
389
391
389
Rest of the world
274
272
271
209
213
4,418
4,416
4,411
4,411
4,376
total
* Branches and inhouse locations.
34
Q4 2014
October 29, 2015
3rd quarter results 2015
corporate staff by region
average
Q3 2015
Q2 2015
Q1 2015
Q4 2014
Q3 2014
North America
6,460
6,410
6,250
6,230
6,160
France
3,500
3,410
3,390
3,430
3,410
the Netherlands
4,230
4,050
4,120
4,430
4,420
Germany
2,550
2,560
2,570
2,620
2,610
Belgium/Lux
1,910
1,870
1,880
1,780
1,790
United Kingdom
1,610
1,530
1,510
1,550
1,530
Iberia
1,790
1,720
1,650
1,630
1,600
Rest of Europe
2,880
2,740
2,650
2,570
2,480
Rest of the world
4,970
4,780
4,690
4,680
4,720
190
190
190
200
200
30,090
29,260
28,900
29,120
28,920
Corporate
total
35
October 29, 2015
3rd quarter results 2015
staffing employees by region
average
Q3 2015
North America
107,800
105,900
France
76,800
74,400
the Netherlands
75,300
74,900
Germany
47,100
47,700
Belgium/Lux
44,500
43,300
United Kingdom
15,300
15,900
Iberia
63,700
61,000
Rest of Europe
63,800
57,900
115,200
107,800
609,500
588,800
Rest of the world
total
36
Q3 2014
October 29, 2015
3rd quarter results 2015